Kan ducks the rice problem

HONG KONG — Has Prime Minister Naoto Kan finally woken up to the fact that the world is changing rapidly and Japan risks being left behind? In recent days he has spoken of a fresh fleet of “black ships” off the coast of Japan, and has noted nostalgically that he comes from Choshu (now Yamaguchi Prefecture) whose rebels were crushed in 1864 when they tried to prevent foreign forces from reopening Shimonoseki Strait to shipping.

Poor Kan — and poor Japan — the prime minister has realized the threat and the opportunity, but lacks the guts to take action that might seize the chance and actually do something to start the revival of the Japanese economy.

The specific problem, identified by Kan as the modern black ships, concerns a proposed Trans-Pacific Partnership trade agreement, currently being negotiated by nine countries, including Australia, Chile, Malaysia, Singapore, the United States and Vietnam. Kan wants to join the talks but is scared of the backlash from powerful agricultural interests, so has decided to ask questions but postpone joining until at least the middle of next year — when it may be too late for Japan to influence the negotiations.

This outsider can understand the cultural importance of agricultural and the special influence of rice farming, both for producing Japan’s staple food and for binding communities together.

Pasona Group, which takes great pride in being a modern company, has tried to show the importance of agriculture by opening what it calls an “urban farm” at its headquarters right in the heart of Tokyo. More than 200 kinds of flowers, fruit and vegetables grow right inside the front doors, but the centerpiece is a large rice paddy lit by energy-efficient lamps that help promote three crops a year.

Employees and visitors are welcome to help, and dark-suited young men and women put on rubber boots and plunge ankle deep into the mud to transplant rice and lend a hand in growing the crop. Pasona Chief Executive Yasuyuki Nambu has said that he wants to cultivate “symbiosis with nature” and better relationships between employees.

But as an economic benefit the rice paddy has doubtful value. Even with three crops a year, Pasona’s paddy produces 50 kg a crop or just enough for 3,000 rice balls a year for the company’s staff canteen. Worse, by romanticizing rice production it may obscure the very real problems for Japan in its protection of agriculture.

Much of the heralded importance of rice has migrated to the realm of myth far from the realities of a 21st-century country. When it comes to agriculture, and particularly rice, the Japanese people are being hoodwinked by hooey, lies and fraud.

Agriculture today accounts for just 3.6 percent of employment in Japan and it contributes only about 0.8 percent to gross domestic product. Gross agricultural output in 2009 was about $81 billion, which is about 40 percent of Toyota’s sales in a bad year. But the value of agricultural production is propped up by government support of trillions of yen. Agriculture is not even the main economic activity in rural Japan.

At the same time, Japanese farming is a dying business. The number of farmers has fallen from 11.8 million in 1960 to 1.9 million today, of whom 61 percent are more than 65 years old. Farmers’ income from farming was only 25 percent in 2007. Total farmland has shrunk from 6.09 million hectares in 1961 to 4.63 million hectares in 2008, and the average farm size, Hokkaido excluded, is 1.41 hectares, compared with the optimum of 10 hectares or more for economical farming. Only 0.7 percent of Japanese farmers have holdings of the optimum size.

There has been a dreadful price to pay for Japan’s agricultural mess, apart from the trillions of yen in subsidies, tax relief and protective tariff walls of 778 percent for rice. Worst of all, Japan’s self-sufficiency in food has fallen to 41 percent, the lowest of all major developed countries. The United Kingdom’s self-sufficiency is about 70 percent, and both the U.S. and France are more than 120 percent self-sufficient.

The primary reason for the failure has been the poor “gentan” policy that concentrates on rice rather than farming economy or food self-sufficiency and exacerbated by collusion between the so-called iron triangle of the ministry of agriculture, forestry and fisheries, Japan Agriculture (agricultural cooperatives) and the norin-zoku or agricultural tribe of members of Parliament of the former ruling Liberal Democratic Party.

Perhaps the supreme irony is that the most profitable output in Japanese farming is not a crop, but farmland itself. Government policy to reduce the land given to rice paddies plus political pressures and deals means that farmers can get the highest prices, not by farming or even selling their land to other farmers, but by waiting for the government to give approval for new roads, airports, or shopping malls on released and re-designated land. Good rice paddies are flat, open to the sun and close to water supplies and roads, perfect for new shopping malls.

The advent to power of the Democratic Party of Japan brought a change of policy, as well as the crumbling of one side of the iron triangle. But the new government relies too much on income support and will add new subsidies to the old ones for rice, and does not grasp the nettle of the need for fundamental change.

This is the importance of the talks on a Pacific trade deal. Participation would force Japan to re-examine its agricultural policy in the light of foreign pressure. Foreign agricultural producers want better access to Japan’s markets. Far from abandoning its agriculture, Japan should be thinking of ways to make it more competitive and efficient, to raise its food self-sufficiency and to be looking at agricultural exports, in exchange for importing more foreign goods, as well as giving new opportunities for Japanese manufacturers to participate in the booming Pacific marketplace.

It would mean fostering consolidation of land so that farms could become economic propositions and farmers brought back to the land full time. The fixation with rice would go, but Japanese consumers are already showing the way with demand for wheat products, in which Japan is only 14 percent self-sufficient in spite of 252 percent import tariffs.

In its latest review, the OECD expresses confidence that Japanese agriculture “can survive and thrive in a more open marketplace.” Producers of beef and fruits and vegetables are already showing the way, and the OECD points out that Japan is failing to exploit its “advantages such as its highly educated labor force, its leading position in technology and sophisticated infrastructure.”

It’s strange that the OECD has confidence in the people of Japan, but their own politicians don’t. Kan says he wants to talk to the people on the new black ships, but pulls back because other colleagues are reluctant. The losers are the people of Japan now and in the next generation.

Kevin Rafferty, formerly in charge of the Financial Times’ coverage of Asia, is editor in chief of PlainWords Media.